Buying a pharmacy is not so different to buying any other business, however, there are particular issues that need to be considered. To ensure that the buyer is permitted to operate the business after the contract has been settled, there are several things that need to be considered. For assistance in buying a pharmacy in Queensland, you should speak with a small business solicitor.
Regulation & Pharmaceutical Benefits Scheme
Queensland imposes stringent rules about the ownership of pharmacy businesses. To buy a pharmacy business, the purchaser, (whether an individual or a company), is required to comply with the Pharmacy Business Ownership Act 2001. The penalties for not following the legislative rules around purchasing a pharmacy are severe, with fines of up to $20,000, not to mention the fact that you are now the owner of a business you are not even allowed to operate without breaking the law.
As such, before you enter any agreement to buy a pharmacy business, you should think about how long you will need to obtain the relevant licences and permits. Once all relevant state bodies have approved the proposed purchase of the pharmacy, Medicare Australia will allow you to apply for approval under the scheme. A small business solicitor should be consulted once this approval has been given.
Until you have the approval from all state and federal bodies to legally purchase the pharmacy, the seller will most probably want a small business solicitor to include a special condition into the contract that requires the purchaser to obtain these approvals prior to entering into any contractual arrangement to sell the business.
Supply Agreements and Stocktake
It is extremely important that the stock of the pharmacy – things like medicines, supplements, and first aid supplies, to name just a few – continue to be supplied without any interruption after the contracts have been settled. To achieve this, it will be necessary to have your small business solicitor include specifically drafted special conditions into the contract. That way, in the event that existing supply agreements cannot simply be transferred to the new buyer, all supply agreements will be renewed or negotiated prior to completion. This would require your small business solicitor to conduct a thorough investigation as part of the due diligence process.
It is fairly common for clients or customers of a pharmacy to have regular prescriptions on a weekly or monthly basis. There may be customers who receive discounts that you, as the new owner, will no doubt want to be aware of. You will want to inherit the details of the client list so that you can continue to service your regular clientele’s needs, as opposed to learning them on the fly.
Have your small business solicitor insert a special condition into the contract that allows you, as the purchaser, to review with your accountant the financial records of the business, along with the various customer accounts. This will allow you and your small business solicitor sufficient time and information to determine the viability of the business moving forward.
If you are serious about buying a pharmacy, it should come as no surprise that legal advice is absolutely essential. Ideally, you should seek legal advice from a business solicitor with experience conducting due diligence, but a contract solicitor will also be able to assist. If you fail to engage a small business solicitor, you could potentially end up with a pharmacy that you have no legal right to operate. Avoid this possibility by contacting one of LegalVision’s small business solicitors on 1300 544 755.